The consequences of impact on the national economy from the introduced quarantine can be much harder than officially expected by the Cabinet of Ministers of Ukraine (CMU).

In addition to internal factors, external ones were added: the return of hundreds of thousands of migrant workers, who lost their jobs in neighboring countries. Plus, the threat of falling of global commodity prices - the main article of Ukrainian exports.

In this case, a 4.8% drop in gross domestic product (GDP) is not the worst case scenario. However, before the outbreak of the coronavirus epidemic, it was expected that the GDP growth would amount to 3.7% by the end of 2020.

This means that in reality, the Ukrainian economy will lose 8.5% - approximately, as in 2014.

Losses calculation

The mood of the leaders of large companies and enterprises is even more pessimistic: the European Business Association, which conducted the survey, expects Ukraine's GDP to drop by 9% in 2020, if quarantine is extended.

The CMU estimates the losses from quarantine and crisis at UAH 510 billion - the forecast of nominal GDP in 2020 was reduced by such an amount: from UAH 4.51 to 4 trillion.

This is a comprehensive, but not complete assessment. Since according the results of IV quarter of 2019, the Ukrainian economy received $16.668 billion of revenue.

Of these, the service sector accounted for $3.777 billion, or 22.7% of the total volume. And it suffered the most: closed restaurants, cafes, hotels, motels, cinemas, shopping centers, etc.

The transport industry in IV quarter of 2019 brought $1.85 billion, or 11%. It is among the most affected by quarantine too: bus and passenger rail and air transport services have been suspended.

That is, we are talking about the loss of a quarter of income of the Ukrainian economy during the quarantine period. And, of course, we should remember the chain reaction.

People left without work will not be able to buy anything - a drop in sales volumes and inevitable reductions of staff will follow in other sectors.

Hundreds of thousands of people who are forced to return from Poland, Russia, and the Czech Republic will no longer be able to send foreign currency transfers here to support the families.

According to the National Bank of Ukraine (NBU), private money orders from other countries reached $12 billion in 2019. The absence of such a serious currency supply will put pressure on the hryvnia exchange rate.

The CMU worsened the forecast for it from 27 to 29.5 UAH/$ - but it seems that it will actually be closer to 35 UAH/$, as president of the Dragon Capital investment company Tomas Fiala predicts.

Since, in addition to stopping foreign currency inflows from migrant workers, it is necessary to take into account shortfalls to the state budget.

Firstly, from the non-working sphere of services and transport, and secondly, due to the termination of imports of a significant amount of goods.

The state budget revenue plan was underfulfilled by UAH 10.19 billion at the end of March. The shortfall in January amounted to UAH 13.8 billion, in February - UAH 4.182 billion.

In these conditions, the CMU will have to finance expenses in two ways: through new loans and the NBU printing press.

Actually, this is already being done: the National Bank transferred UAH 42.72 billion to the state budget on April 1.

Currency issuance will promote the inflation (rise in prices for consumer goods) much higher than 8.7% that the Cabinet of Ministers is now targeting in its forecast - instead of the previous 5.5%.

At the same time, the government expects that the salary of citizens by the end of 2020 will remain at the level of 2019. Against the background of the inevitable increase in prices, this means impoverishment for the majority of the population.

Well, the increase in public debt will further increase payments from the budget on the loans taken - despite the fact that about 30% of the funds collected from taxpayers are already being used for these purposes.

That is, the country continues to be pushed deeper and deeper into the debt hole, and no one seems to know how to get out of it later.

Nevertheless, in order to ensure the April payment of pensions and other social obligations, the government of Denys Shmyhal borrowed $150 million from foreign creditors in early April.

If this practice continues, the default of Ukraine will come much faster than expected by investment analysts.

"Umbrella" over the agro-industrial complex

The threats to the Ukrainian economy from a possible fall in the world commodity prices are worth considering individually.

To be true, the point here is not so much in the coronavirus as in the oil "war" between the OPEC cartel and the Russian Federation. It began in March and led to the collapse of the cost of Brent oil from $66 to $25 per barrel.

In turn, this pulled down the prices of staple food crops. So, if wheat on the Chicago Stock Exchange (the main global indicator) was at $210/t on January 20, then on March 9, it fell in price to $189/t.

However, the rate rose again to $209/t in early April. This happened due to the stopping of grain exports from Argentina, which closed seaports in the hope of preventing the spread of coronavirus.

The introduction of a ban on the export of food crops from the Russian Federation for the period of crisis and a favorable forecast for American crops, published by the U.S. Department of Agriculture, also had a positive effect.

It follows from this that so far, the world food prices are not in danger of collapse. And that means that the Ukrainian agro-industrial complex is also under a protective "umbrella".

But, of course, the situation may change: the ports in Argentina are closed today, tomorrow they will be opened again. The forecast for the American crop may be worsened, etc.

The oil "war" can last much longer than the COVID-19 epidemic. There is also some positive here: the price of gas will fall after oil.

Theoretically, this means a decrease in the cost of housing and communal services, especially heating and hot water.

However, the experience of the completed heating season 2019-2020 showed that there is a direct connection in Ukrainian realities only in the event of a rise in price of gas - then the prices of housing and communal services proportionally rise as well.

If gas becomes cheaper, payment for housing and communal services either remains the same or decreases symbolically, by 1-2%. And this is given a decrease in gas prices by 2 times compared to the previous 2018-2019 season.

The same applies to the cost of gasoline and diesel. If the Antimonopoly Committee of Ukraine insists on lowering prices by 3-5 UAH/liter, the owners of gas stations reduce the prices by UAH 0.14-0.17.

Therefore, theoretically, there are moments that can weaken the impact of the oil crisis - but they never work in the case of Ukraine.

As for the cost of iron ore, another major article of Ukrainian exports, the situation here is still quite favorable along with grain.

Iron ore was offered at $88/t on the main trading floors of China at the beginning of April. Whereas during the previous collapse in oil prices in 2014-2015, quotes fell to $45/t.

There is no reason to worry now. Indeed, despite strict quarantine, China managed to increase steel production by 9.2% already in January-February, compared to the same period in 2019, to 149.58 million tons.

This means that demand for metallurgical raw materials in China remains constant. And the products of Ukrainian iron ore plants there are still in demand.

Mining and processing plants of the Metinvest group of Rinat Akhmetov and Vadym Novynskyi are going to sell iron ore exactly to China.

The group had to stop the operation of two of its metalworks in northern Italy since April 1. This was done by order of the government as part of the fight against COVID-19.

In this regard, Metinvest announced the postponement of the launch of a number of blast furnaces at the Mariupol combines named after Ilyich and Azovstal, as well as at Zaporizhstal.

This means a significant reduction in the volumes of iron smelting and steelmaking at these enterprises - after all, metal production volumes at other European Metinvest plants, in Bulgaria and the UK, also fell.

Therefore, the group of R.Akhmetov announced a possible complete cessation of the production of steel semi-finished products at Azovstal - if the situation in Italy does not begin to improve in the near future.

"Excessive volumes of iron ore produced at the group's mining and processing plants in Kryvyi Rih will be directed to the traditional sales markets due to a possible decrease in pig iron production - in particular, to China", - the report said.

It is worth noting that already by the end of March, steel production in Ukraine decreased by 9.1% compared with the previous month, to 1.79 million tons, pig iron - by 4.6%, to 1.75 million tons, rolled steel fell by 7.9%, to 1.56 million tons.

This is one of the consequences of the COVID-19 factor - because in connection with the spread of the disease and the panic around it, demand for steel products has fallen in many countries, especially, in the EU.

It follows that just the Ukrainian metallurgy will take the main blow of the global crisis caused by the spread of COVID-19.

This is confirmed by the decisions of European metallurgical companies to reduce steelmaking due to stoppage of construction and automobile plants in the EU.

To make money from the crisis

In addition to the objective crisis factors, from which the Ukrainian economy cannot escape, speculative ones have also appeared.

These include the stop on April 1 of one of the largest Ukrainian mining associations, Dobropilliavuhillia, which is part of DTEK - a company that manages the energy business of R.Akhmetov.

The import of electricity from Belarus and the Russian Federation was among the reasons for this decision. Allegedly, there is no demand for our own products because of this.

Meanwhile, electricity in Ukraine is even more expensive than in the EU for some reason.

That is why electricity from the Russian Federation and Belarus is also cheaper - and Ukrainian consumers buy it much more willingly. Everything is in full accordance with the laws of the market, for which (when it is beneficial for them) both DTEK top managers and their lobbyists are all in favor.

But in this case, they are promoting the thesis that it is necessary to stop sponsoring the aggressor state, while purchasing coal from Russia for their Ukrainian thermal power plants.

Without explaining why Ukrainian consumers should pay more for electric power - is it really just so that R.Akhmetov continues to receive super-profits?

Well, if you cannot openly compete with foreign suppliers, then the question of the notorious "efficiency of the private owner" compared to the state arises.

If the very same private owner is not so effective without the help of the state (read: at the expense of millions of Ukrainian taxpayers) - is it not easier then to return the management of these assets to the state?

Indeed, despite the fact that the Dobropilliavuhillia employees were promised to pay wages during downtime in accordance with the collective agreement - the country's leadership is likely to be given a clear signal: either we will play in the energy market according to our rules (more precisely, according to the rules favorable to DTEK) or the explosion of public anger is possible in case of termination of payments to miners.

This is a real challenge for President Volodymyr Zelensky and his team. Indeed, on March 18, the CMU, headed by D.Shmyhal, adopted a decision on maintaining 45% of duties on the electricity imports from Belarus and the Russian Federation.

It would seem that more than a deep reverence was made towards the company of R.Akhmetov. But the trick is that duties were also imposed on Russian coal - which in general looks quite logical, if we consider Russia as an aggressor state.

But, as it was already noted, DTEK itself imports coal from the Russian Federation - therefore, this option does not suit the top managers of the company and its owner.

Hence, probably, the decision to stop Dobropilliavuhillia and a number of related enterprises follows.

Thus, it seems that now the business interests of oligarch No.1, whom R.Akhmetov continues to be, are trying to get the best of the presidential team, despite the difficult times that have fallen for Ukraine.